Many people think of a million-dollar home as a fantasy, available only to the super-privileged or lottery winners. But the fact of the matter is more people than ever are buying homes worth in excess of $1 million, and the demand for such “high-end” homes is expected to go nowhere but up.

Just look at the numbers. From 2002-2004, the number of million-dollar homes in the United States nearly doubled from 595,441 to 1,034,386, according to the U.S. Census Bureau. Although the numbers aren’t in yet, industry experts say the trend continued in 2005 and the start of 2006.

“From our perspective here in New York and the Hamptons, there was no slowing up in terms of deals and interest in 2005 and first quarter 2006,” says Diane Saatchi, senior vice president at Corcoran Group, a New York-based residential real estate agency.

Saatchi’s admits all the “bubble babble” has more homeowners putting their places on the market looking to sell while the price is high. And that means more homes available and longer sell times. But from Saatchi’s perspective, prices are up roughly 20 percent over last year and volume is up as well, she says. “Demand hasn’t diminished, supply has increased.”

A million dollars simply is where housing is going, fueled by appreciation and developers seeing market opportunities.

“New home builders look at what’s in the marketplace and what they can get and how they price. If they see appreciation going up in a specific area, that’s where they’ll put their new homes,” says Mike Silvas, owner of Morgan Lane, a high-end real estate broker with eight offices in Northern California.

Silvas has seen no drop-off in the luxury market in Morgan Lane’s region, particularly because people in those price ranges are less affected by rising interest rates, he says.

“Is life going to change because you get only an $8 million bonus instead of getting a $12-million bonus?” asks Saatchi. “I don’t think these folks are concerned about the rising cost of fuel or adjustable-rate mortgages that the rest of us worry or think about.”

“One reason why the luxury market is doing so well is because no matter how expensive these properties seem to mere mortals, the cost of real estate represents a small part of their portfolio. [The Hamptons] are cheap compared to the south of France or Aspen or La Jolla,” says Saatchi.

In fact, the million-dollar mark really isn’t the yardstick it used to be to measure the high-end market.

“One million dollars is a basic starter house for the Hamptons,” says Saatchi. “I count the number of properties over $5 million, because that’s a good indication of the luxury market here. And now it’s not crazy to count the number of sales over $10 million.”

That being said, when looking at the number of million-dollar homes in the country, the majority of the increase is comprised of “modest” million-dollar homes. Price simply isn’t as big of a deal as it was 15 years ago, says Bob McLemore, president, HouseRaising Inc., a Charlotte, N.C.-based builder.

In 1992, with interest rates above 10 percent, people were looking at an $11,000 monthly payment for a million-dollar home. Last year, the same priced home with the same mortgage amount would call for $6,000 per month – high, for sure, but more affordable to a larger segment of the population.

In addition, these million-dollar properties are not necessarily the mansions one might imagine. The traits that put a property in that range are a mix of size, location and amenities.

For example, a teardown lot in the Myers Park area of Charlotte might run $750,000 alone. Building a 3,500-square-foot home on that lot easily pushes the price well into the million-dollar range. On the other hand, a 7,000-square-foot home on a suburban Charlotte lot will also run $1 million.

“The cost of the structure itself is staying pretty level,” says McLemore. Costs that were driving homes to the million-dollar price range in 1992, like granite countertops and ornate fixtures, have plummeted only to be offset by rising costs for other amenities like custom cabinets and higher-end appliances.

These homes are not necessarily packed with the most expensive building components, built on acres of land or replete with built-in swimming pools or other flashy features. They are more “normal” than one might imagine. One million dollars is looking more and more common.

Says Silvas, “One million dollars definitely buys you an executive upper middle class home, but not anywhere near what you used to get and not the opulent mansion you see in very exclusive neighborhoods.”

Paul Rogers has covered a wide range of issues for The Mercury News since 1989, including water, oceans, energy, logging, parks, endangered species, toxics and climate change. He also works as managing editor of the Science team at KQED, the PBS and NPR station in San Francisco, and has taught science writing at UC Berkeley and UC Santa Cruz.

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